US job data falls short of expectations

by STJobs, 07/04/2012

WASHINGTON: US payrolls rose far less than expected last month, keeping the door open for further monetary policy support from the Federal Reserve, even as the unemployment rate fell to a three-year low of 8.2 per cent.

Employers added 120,000 jobs last month, the Labour Department said yesterday, the smallest increase since last October.

The March increase was less than the most pessimistic forecast in a Bloomberg News survey, in which the median estimate called for a 205,000 rise.

Last month's weak employment growth likely reflected the fading boost from unseasonably warm winter weather. The payroll count for January and February was revised to show just 4,000 more jobs created than previously reported.

The fall in the unemployment rate, to the lowest level since January 2009, reflected a drop in the labour force. The separate household survey, from which the jobless rate is derived, also showed a decline in employment.

The weak employment gains could hurt President Barack Obama's chances for re-election in November. The unemployment rate has fallen from 9.1 per cent in August last year.

Faster employment growth that leads to bigger wage gains is necessary to propel consumer spending that accounts for about 70 per cent of the economy.

Yesterday's data showed Americans worked fewer hours and earned less on average per week, helping explain why policymakers say interest rates may need to stay low at least through late 2014.

'You are going to see a slowing in the pace of job growth,' Mr Neil Dutta, an economist at the Bank of America in New York, said before the report. 'Despite the much ballyhooed recovery in the labour market, we have seen more jobs, and yet disposable income is weaker.'

The painfully slow recovery in the labour market is a concern for Fed chairman Ben Bernanke, who is keeping open the option of further monetary policy support for the economy if the unemployment rate remains stubbornly high.

Minutes of the Fed's March policy meeting released this week showed policymakers seeing a broadening of the economic recovery, leaving them slightly less inclined to launch a third round of bond purchases, known as quantitative easing, to spur growth.

The private sector added 121,000 new positions last month, while government employment edged down 1,000.

Construction hiring fell 7,000, the second straight monthly decline. In the huge service sector, gains were in the health care, professional and business services categories. Temporary help fell 7,500 after rising 54,900 in February.